Plea for stamp duty holiday to revive housing market

Linda J. Dodson

An emergency stamp duty holiday is needed to reinvigorate the housing market after it was brought to a virtual standstill, surveyors have said.

Urgent action is needed to get properties selling again, the Royal Institution of Chartered Surveyors (Rics) said as its latest snapshot showed the property market at its lowest ebb since monthly surveys began more than two decades ago.

The Covid-19 crisis has wrecked a sales revival which began at the start of the year and has sent estate agent sentiment plunging, with a balance of 92pc predicting lower transactions over the next three months.

Agreed sales also plunged last month, while the shutdown brought the number of properties on estate agents’ books to just 40 per branch.

The devastating impact of coronavirus means that the Government should ease the burden on buyers and revitalise the market by scrapping stamp duty payments on transactions for a temporary period, Rics said.

The Treasury garnered almost £13bn in stamp duty revenues last year, although takings will already be down due to the market hibernation.

The average buyer in England pays £2,400 in stamp duty, rising to £13,500 in London. First-time buyers are already exempted from the tax on houses costing up to £300,000. 

Hew Edgar, of Rics, said: “The Government will need to start considering medium and long-term measures that could assist a post-pandemic housing market. 

“As we start to emerge from this crisis, however, it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off.

“For those who can afford to move they may lack confidence in the market, adding to the slowdown. A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short-term measure.” 

RICS found that 31pc of agents expect London house prices to drop this year. Major player Knight Frank forecasts the decline will be limited to 2pc before a 6pc rebound in 2021, although other predictions have been gloomier.

Tom Bill, head of London residential research at Knight Frank, said: “The government understands that moving house has enormous knock-on benefits for the wider economy.

“Anything it can do to kick-start the process once lockdown measures are relaxed will have ramifications far beyond the housing market. A material cut in stamp duty or an extended stamp duty holiday should be central to these efforts.”

Meanwhile the London Property Alliance (LPA), which represents central London’s commercial property owners, investors and developers, has asked ministers to relax rules on how much affordable housing needs to be built alongside major developments.

In a letter to Housing Secretary Robert Jenrick, the organisation said: “The effects of Covid-19 on the housing market will not be clear for some time.

“It may well fundamentally change aspects of it.”

Builders should be allowed to negotiate with councils about the amount of affordable housing they are required to build, it said. 

The pleas come as the property industry is hammered by a pause in construction.

Analysis by consultant Savills found construction has stopped on sites with capacity for 193,000 new homes, equivalent to 79pc of the total new supply expected in 2018/19.

Landlords have been giving tenants rent holidays but have also warned they are at risk of running out of cash themselves.

The LPA, which represents more than 420 organisations, is among several industry groups calling for extra government support. 

As well as relaxed terms around affordable housing, it is also calling for measures including a two-year extension on planning permissions set to expire over the next 12 months. The group also want more flexibility on high street planning rules to make sure empty shops can be filled. 

LPA chief Charles Begley said: “The focus of all responsible owners is to help their tenants through short-term issues so that they are in a position, financially and operationally, to resume business when the crisis abates – and to continue investing in, and start building, the homes and workspaces of the future as soon as possible.

“These actions, however, require specific support of national government.” 

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